18 Questions
What is one of the sectors emphasized for growth funds according to the text?
TMT
Which of the following is NOT a stage in a Growth Fund's Sourcing Funnel as described in the text?
Customer Service
What is the typical range of returns targeted by growth funds according to the text?
3x to 5x
In what stage of the investment process do growth funds influence strategy, capital allocation, and risk management through board representation?
Investment Realization
Which type of firms use a large amount of preferred equity to receive dividends and lower risk as mentioned in the text?
Private Equity Firms
What is a common characteristic of middle market and lower middle market transactions mentioned in the text regarding leverage?
They avoid using leverage due to risk concerns
What is the typical exit strategy for a private equity investment?
Sale to a strategic buyer or another private equity firm, or IPO
Why is private equity often considered illiquid?
Because the investment requires a commitment period of 6-15 years
What is the primary source of capital in a 'bootstrap' acquisition?
Borrowed funds secured by the target company's cash flows
How does private equity typically contribute to a portfolio's liquidity?
By adding illiquidity premium and growth potential
Why is liquidity an important consideration in investment portfolios?
To be able to quickly convert assets into cash in times of need
What does it mean to 'sell liquidity' from a portfolio?
To tie up cash in illiquid investments, making it unavailable for immediate use
What is considered the most important factor in one manager's methodology for implementation?
Strategy
What is the key focus in the 'Talent Magnet' culture mentioned in the text?
Performance-oriented approach
What is the crucial aspect to consider in private equity to avoid a major mistake?
Running out of liquidity
What type of acquisitions are recommended in the text as a strategy for private equity firms?
'Add-on' or 'Bolt on' acquisitions
In private equity, what is emphasized as the primary focus for consistent success?
'Blocking and tackling'
What is Martin H. Dubilier's attributed quote warning against in private equity?
Running out of liquidity
Test your knowledge on the characteristics of private equity investments, exit strategies, illiquidity, and its role in an investment portfolio. Explore concepts such as transition capital, exit options, and the illiquidity premium.
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